Industrial IoT: it’s all about costs

The idea and possibility of connecting remote industrial assets is nothing new. At Air Liquide, we have been connecting the Oxygen and Nitrogen Tanks we install in client sites for over 15 years.

Technology-wise, connecting remote objects has been possible for a long time, using fixed telephony or mobile networks. Industrial IoT (IIoT, ie IoT for industrial companies) is not a question of technology but a question of business case. It can be summed up in a simple question: will the savings and extra revenues generated be superior to what could be called the “Total Cost of Connecting Assets” (TCCA)?

Every time a new telecom technology appears, TCCA drops. Business cases that were not sustainable before become profitable. When GPRS technology emerged, new applications opened up, as it was less costly to install a wireless device than to set-up a fixed telecom line. At the time the buzzword was “M2M” (Machine to Machine) – and billions of connected objects were supposed to appear before the 2000s were over. They did not, as only those assets with a positive business case were actually connected.

So why this new IoT hype?

Since the beginning of this decade, a new family of telecom technologies, called LPWAN (Low Power Wide Area Network) have emerged. Again, they strongly lower the costs of connecting remote assets. Sigfox & LoRa both belong to this family, along with lesser known technologies including those pushed by the GSM Association. The buzzword is now “IoT”.

Does this mean that the billions of connected industrial assets, predicted at the time of the M2M hype, will appear within the next 3 years? Things are not so simple.

First, use cases with the most obvious benefits of connecting objects have already been addressed using GSM connectivity. So the use cases opened by LPWAN lower costs are trickier and more complex to prove. Companies therefore cautiously get into a relatively long cycle of tests, PoC and pilots before considering full scale deployment.

Secondly, TCCA does not only depend on telecom costs. It also depends on the cost of:

sensor & communication device attached to the asset

software needed to operate the remote asset and retrieve data (“IoT Platform”) as well as to support the new business application

manpower, from field operations costs (installation and set-up of the sensor & communication device on the asset, plus recurring maintenance costs – typically changing a battery), to extra business operations teams needed to deliver the use case.

LPWAN technologies partially address this issue as they lower the communication device cost (compared to GSM) and – as the name suggest – are “low power” (meaning less battery changes) – but there are still some costs.

For IIoT to be real, we need both LPWAN technologies and a holistic approach to lowering TCCA. TCCA is the battle Alizent is now going for, leveraging along the way its new partnership with Sigfox.